Prices of private resale homes edge up

Private resale home prices in Singapore edged up last month, an indication that home buyers’ interest in the resale market remains healthy. 


According to the NUS Singapore Residential Price Index (SRPI), prices of resale homes climbed 0.8 percent in April after rising 0.4 percent in the preceding month.   


High-end units saw a 1.6 percent increase in prices, while prices in non-central region remained unchanged in April. 


“The secondary market volume is picking up, especially after the run-up in new home sales in the first quarter,” said Donald Han, Special Advisor at HSR Property Group. “Primary market prices have gone up and some buyers may think that they can get better value in the secondary market.”


The monthly index measures a basket of non-landed completed private condominiums and apartments, excluding hybrid public-private homes such as executive condos (ECs). 

Developers rush to meet marketing rules deadline

DEVELOPERS are warning of administrative headaches in the changeover to new rules this Friday requiring them to be more transparent in the marketing of their projects.

A check with developers by The Straits Times found that most are ready to meet the deadline on Friday.

But they report a frenzy of activity as developers, lawyers and architects rush to tie up loose ends given the tight deadline of just one month since the changes were announced.

Developers say that while they do not anticipate major challenges in complying with the new rules, the sales process will become much more complicated.

There will be an increase in paperwork, especially for projects with units left unsold at the time of the change.

They will need two versions of sales and purchase agreements and options to purchase - one for sales before May18 and another set after. Each will have different contractual obligations.

This means that even if a few units in a launched project are unsold, the developer must use the new versions of the purchase documents mandated by the Urban Redevelopment Authority (URA) for all sales from Friday onwards.

The URA made changes to its Housing Developers Rules last month, requiring developers to give more information in writing on the project and unit to buyers before the option to purchase is issued.

This first phase of changes to ensure that 'what you see is what you get' requires developers to provide a drawn-to-scale project location plan and site plans. They must also give a unit floor plan and a breakdown of a unit's floor area by spaces such as bedrooms, balconies and bay windows.

Other new requirements include getting the consent of home buyers before making changes such as adjustments to a unit's layout.

A CapitaLand Residential Singapore spokesman said the firm has been adopting many of these best practices and does not anticipate major challenges in complying with the new rules.

'We will work with our various project consultants to compile and present the required information in the clearest and most concise manner possible, whether in the form of text or diagrams, so as to help our home buyers make better informed decisions.

'We believe this is a positive move that will enhance the attractiveness of the Singapore property market to both local and foreign home buyers, so we are fully supportive of it,' he added.

One privately held developer, however, flagged the tight deadline as one of the key challenges in complying with the new regulations.

'We have quite a number of projects that are affected and many of these projects are handled by the same consultants, so it means they have to work extra hard to meet the deadline,' it said.

Another mainboard-listed developer, which declined to be named, noted that certain rules are not clearly defined, leaving some ambiguity as to what exactly they apply to.

For instance, developers have to notify home buyers about 'substantive changes' to the common property in a project, but what constitutes 'substantive' is unclear. Positive improvements to the project could also possibly be held hostage by a single difficult buyer unless he chooses to forgo his purchase.

Mr Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, noted that these rules are also applicable to executive condominiums and Design, Build and Sell Scheme projects.

'Due to the special nature of such projects, developers and lawyers have spent extra time liaising with the regulatory authority HDB on the specific changes to be made to the option and sales and purchase agreement formats to be used for these projects.'

Mr Lee added that industry players feel the preparation time given for the new rules to be implemented is too short, especially since they are also applicable to projects which have been partly sold before this Friday.

Strong interest seen in Farrer Drive site

ANYWHERE between 10 and 20 developers could make a beeline for a plum 99-year private housing site at Farrer Drive, next to Sommerville Grandeur and just a few minutes' walk from the Farrer Road MRT Station. The site has been triggered from the government's reserve list.

While the high-end residential market has been quiet, developers eyeing the prospects of building small-format apartments to keep the lump-sum apartment prices relatively affordable would find the District 10 plot attractive. Another draw is the site's manageable size with the all-in development cost estimated at about $166 million based on the top end of pricing expectations for the plot.

These estimates from property consultants came after the Urban Redevelopment Authority announced yesterday that an unnamed party has made a successfully application for the site's release with a commitment to bid at least $88.888 million ($823.33 per square foot of potential gross floor area) at tender. Analysts forecast the winning bid could fall in the $850-1,100 per square foot per plot ratio (psf ppr) range.

The 67,471 sq ft plot, with a 1.6 plot ratio (ratio of maximum gross floor area to land area), can be built up to eight storeys and some market watchers say it could potentially yield about 100-200 apartments, depending on unit size mix.

International Property Advisor chief executive Ku Swee Yong, estimates the winning bid could be as high as $1,100 psf ppr, which would translate to a breakeven cost of about $1,550 psf. "The project's average selling price could be around $1,700-1,800 psf assuming it comprises mostly one and two-bedder apartments. Just the first 20 per cent payment from buyers - assuming all the units are sold before construction begins - could be enough to cover the construction costs." he added.

Mr Ku estimates the all-in development cost at about $166 million - considered a relatively bite-sized quantum which should draw construction companies, boutique developers and some of the bigger players as well to participate in the tender for the site. He expects 10-20 bids.

Savills Singapore research head Alan Cheong predicts "at least 10-15 bids", pointing out that "any plot in the $100 million range will attract a swarm of bidders". He predicts the winning bid could be around $930 psf ppr, or $100 million.

CBRE executive director Li Hiaw Ho, who's expecting 15-20 bids, reckons the top bid could be around $1,000 psf ppr, translating to a breakeven cost of about $1,450-1,500 psf and selling price of around $1,700 psf on average, assuming the project includes a fair number of small-format units.

Giving a more cautious take, Credo Real Estate executive director Ong Teck Hui predicts "realistic bidding" as bidders will factor the supply overhang in prime districts. He predicts the top bid at $850-950 psf ppr.

"The average price of units up to eight storeys in a new project nearby is about $1,500 psf," he added, alluding to d'Leedon. The 36-storey project has a whopping 1,715 units ranging from one-bedroom-with-study to four-bedroom apartments as well as 12 strata semi-detached houses.

Mr Ong also described the latest Farrer Drive plot on offer as a "remnant infill site sandwiched between existing condominiums but having an attractive District 10 address". It will be a smallish development with low absolute land price which makes it affordable to even smaller developers, he adds.

URA will launch a tender for the site in about two weeks. The plot was made available for application on the reserve list less than a month ago, on April 16.

Analysts say this is one of the two choicest pure-residential sites on the current Government Land Sales Programme. The other, which was made available for application on April 30, is at Farrer Road, next to Lutheran Towers and a short distance from Botanic Gardens MRT Station. It is an even smaller plot at about 29,530 sq ft and 1.4 plot ratio. "I wouldn't be surprised if that site is triggered for release soon," said Mr Ku.

Top bid of $233.5m for EC site next to Tampines Trilliant

AN executive condominium (EC) plot next to the Tampines Trilliant project yesterday received a top bid of $233.5 million, or $373.40 per square foot per plot ratio (psf ppr), the second highest land price for an EC site since land sales resumed in 2010.

The joint bid, which was put up by Singxpress Property Development, Amara Holdings' Creative Investments and Kay Lim Realty, was 4.9 per cent lower than the $392.45 psf ppr the Tampines Trilliant site achieved in April last year.

It beat the second highest bid ($368.88 psf ppr), a joint effort put up by Maxdin, BPK Development, United Infrastructure and LMG Realty, by a mere 1.2 per cent. Maxdin is a subsidiary of UE E&C Ltd, which, in turn, is part of the United Engineers Group.

"The bullish bids were likely spurred by several locational attributes. For instance, the site is in close proximity to established educational institutions including Temasek Polytechnic, United World College of South East Asia and ITE College East. It is also within 10 to 15 minutes' walking distance from the Tampines Regional Centre," said Chia Siew Chuin, director of research and advisory at Colliers International.

With an estimated break-even cost of about $680-$700 psf, the completed EC could possibly sell from $800 psf, added Ms Chia.

Said Nicholas Mak, head of research at SLP International Property Consultants: "This indicates that the developers share the same opinion that this is an attractive site which the development can be launched at above $750 psf."

He added that some of the bidders also took part in the Woodlands EC tender that closed one week ago. They include Maxdin Pte Ltd, EL Development Pte Ltd, White Haven Properties Pte Ltd and MCL Land.

Based on an estimated breakeven price of $670 to $700 psf, this "could provide the developer with a decent margin", he added.

That all six tender bids were within an 8 per cent price range reflects optimism in the EC market, said Credo Real Estate executive director Ong Teck Hui, adding that units on the subject site are likely to be competitively priced.

The Tampines Trilliant is currently selling at prices of about $750 psf to $850 psf for three-bedroom units, said Colliers International.

The 99-year leasehold site has an area of 223,356.3 sq ft. Based on a gross plot ratio of 2.8, this translates to a maximum gross floor area of 625,397.7 sq ft. It can yield up to an estimated 580 housing units.

Sim Lian Land put up a bid of $222.3 million ($355.43 psf ppr), followed by EL Development's bid of $220.1 million ($351.94 psf ppr). City Developments unit White Haven Properties offered $220 million ($351.78 psf ppr) while MCL Land offered the lowest bid, at $215.5 million ($394.58 psf ppr).

The site, when launched in March alongside three other residential plots released under the government land sales programme (including a reserve list site), was unanimously chosen as the hottest of the four plots by property consultants polled.

Predictions on the winning bid had ranged widely, at $280-$420 psf ppr. As many as 10 to 13 bids were expected for this plot.

More Asians buying luxury homes in the West

Capital flight from emerging economies to safe haven destinations have caused prime property values to shoot up in the West.

Prime property values in London for instance, are now around 3,000 pounds per square foot – levels seen before the 2008 financial crisis.

And the sentiment on London’s properties hardly moved even as the government raised stamp duties on luxury homes.

Fancy living in the same neighbourhood as Lady Gaga? Some investors in Hong Kong have shelled out more than 8 million pounds for that privilege.

They have snapped up apartment units in a new development called Fitzroy Place, located in London’s Fitzrovia district.

According to its developer Exemplar Properties, the price range for a unit at Fitzroy Place is between 605,000 pounds and 8.5 million pounds.

The mixed-use development comprises 237 private apartments and 200,000 sq ft of prime office space. Exemplar said UK buyers will probably take up 50 per cent of units at Fitzroy Place, followed by East Asians, with 15 to 20 per cent.

Exemplar Properties is now in Singapore, on the second leg of its Asian roadshow.

Daniel Van Gelder, co-founder of Exemplar Properties, said: “The first allocation was sold out within three days in Hong Kong, so now we’re here in Singapore with a second allocation and already interest from Singaporean buyers have been huge – some twenty units have been sold ahead of the exhibition.”

Private bankers said Asia’s super-rich is buying more luxury homes in the West, as they face punitive property taxes in their own backyards.

According to a report by Citi Private Bank and Knight Frank, that has driven prime property values up 12 per cent in London over the last year, while prices fell 3.4 per cent in Shanghai and close to five per cent in Singapore.

Tim Bowring, Managing Director and Regional Head of Global Real Estate Investments at Citi Private Bank, said: “From Asian clients we’ve seen over the last 18 months an increase in investor demand in the UK for both commercial and residential markets… They’re buying for capital growth and as a safe haven.”

The pound is trading at historically low levels to Asian currencies like the Singapore dollar, and that has also boosted buying from investors looking for a bargain.

Charles Leigh, Senior Director with CBRE London, said: “When I, with pound sterling, walk into an estate agency, I’m probably paying about 10 per cent more than I was at the peak. When somebody walks into an estate agency from Southeast Asia – with for example, Singapore dollars – they’re paying 40 per cent cheaper.”

Although the UK authorities increased stamp duty by two per cent for properties above the two million pound mark, analysts said prices of central London properties will remain steady because of the tight supply in London.

They added that investors are also looking at buying distressed commercial properties in London and Europe on the cheap.

Mr Bowring added: “I certainly foresee over the next 18-24 months, that the market will grow, and more of that distress, because we have a lot of properties where debt is take up three or four years ago, which are now coming up for renewal of their debt terms, that are probably underwater.”

S’pore’s office vacancy rates expected to rise: CBRE

Singapore’s office vacancy rates are expected to rise further across all grades and micro markets, with a peak expected in 2013, according to property consultant CB Richard Ellis (CBRE).

In the first quarter of 2012, island-wide vacancy in Singapore increased to 7.3 per cent in the first quarter of the year.

In the core central business district, which covers Raffles Place, Marina Centre, Shenton Way and Marina Bay, the vacancy rate increased to 9.3 per cent from 8.8 per cent the previous quarter.

Grade A rents have declined, falling 3.6 per cent quarter-on-quarter to S$10.60 psf/month.

The quarterly net absorption rate, a key demand indicator, stands at a positive 587,000 square feet, boosted by the high 70 per cent pre-commitment level at the Marina Bay Financial Centre Tower 3 project in March.

Moray Armstrong, CBRE’s Executive Director of Office Services, said: “We are seeing strong leasing interest from the energy/commodities, professional and legal sectors. Whilst rents are expected to trend slightly downwards, we do not foresee a significant rental correction as compared to previous cycles.

“Our medium to long-term outlook is that Singapore is ideally placed to capitalise on the shift of economic power to Asia. The lower office cost base that will emerge from this cycle is likely to further improve Singapore’s competitive edge.”

In Asia Pacific, overall office occupancy declined in the first quarter of 2012. But this trend is likely to end in the second quarter, due to slowing occupier demand and oncoming supply all across the region.

8.3 million square feet of new office stock was completed across the Asia Pacific in the first quarter, 33 per cent above the 10 year quarterly average. Completions are expected to exceed 45 million square feet in 2012, a 30 per cent jump year-on-year. This is likely to result in a supply overhang which might push selected projects to 2013.

Dr Nick Axford, Executive Director and Head of CBRE Research (Asia Pacific), said: “A combination of weakening demand and limited availability of development finance is slowing the pace of construction activity.

“Nevertheless, considerable new supply will still hit the market in 2012, which means newer and better quality products for those occupiers looking to secure alternative space this year.”

Industrial property demand still going strong

The robust economic growth since the global financial crisis in 2008 has boosted demand for industrial space in Singapore in the last two years.

Some analysts say the industrial property segment has been a star performer with capital values going up by an average of 23 per cent since 2010. And prospects of higher investment yields are driving demand and prices of industrial properties.

Data released by the Urban Redevelopment Authority showed that industrial property prices have bucked the general downtrend and grew by 7.2 per cent in Q1 this year, compared with the previous quarter.

Meanwhile, prices of private residential property dipped marginally by 0.1 per cent on-quarter during the same period. Rentals for industrial premises have also been rising.

Mr Donald Han, special adviser at HSR, said: “In the last two years, rentals have gone up an average of 12 to 15 per cent per annum. This year, in the first quarter, we saw a rental increase of 1.8 per cent quarter-on-quarter – even that is probably not sustainable, we expect rents to flatten in the second quarter and may potentially dip by as much as about 2 to 3 per cent, making the entire year increase not more than 5 per cent.”

Experts say low interest rates and high liquidity in the market have kept industrial property prices on the high.

They add that occupancy rate of industrial properties at above 93 per cent suggests that a price correction is not on the cards yet.

Mr Alan Cheong, head of research at Savills Singapore, said: “For the first quarter of this year, the strength of the price and rental increases will push that momentum into the second quarter.

“We expect to see prices for multi-user warehouse and multi-user industrial space to rise by 6 to 8 per cent of the similar strength to what we saw for the first quarter this year.”

Meanwhile, analysts caution that the demand for industrial properties may soften if economic growth slows.

And this is likely to put downward pressure on prices of industrial properties. Analysts say rentals may also come down but yields could still be attractive at 5 per cent.

Colliers International research director Chia Siew Chuin said: “The higher prices we see now is probably the result of a skew because of higher prices that we have achieved as a result of smaller units for industrial premises sold. The Government has already put subtle measures but they are development guidelines, in a way, to achieve a more stabilised market going forward.”

Analysts do not believe that the authorities will implement measures to cool the industrial property market, which makes up only about one-tenth of property transactions.

They add that any measures may need to be targeted on investors so as to protect businesses that buy industrial property as a hedge against future rental increases.

Myanmar wants Singapore's expertise in property devt

In a bid to enhance Myanmar’s urban landscape (pictured), its Minister for Construction, U Khin Maung Myint, expressed his country’s willingness to welcome Singapore firms that are keen on developing hotels, high-end condos and serviced apartments in the country.

Myanmar also hopes to tap on Singaporean experts who can develop a comprehensive urban development plan as well as legal and financial framework to promote real estate investments and home ownership in the country.

During a business dialogue organised by International Enterprise Singapore (IE), the Minster said they are also willing to work with firms to build satellite cities and affordable housing.

“Singapore companies have built up extensive experience and industry knowledge in urban development. As Myanmar develops, we hope to tap into Singapore companies' know-how, and welcome them to participate in our growth as we urbanise.”

Myanmar’s Ministry of Commerce said that Singapore is the country’s third largest trading partner. As of last year, bilateral trade between the two nations reached S$1.63 billion, based on IE figures.

Singapore is also the sixth largest foreign investor in the country, with 74 companies investing US$1.8 billion (S$2.28 billion) as of 2011, according to figures from the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI).

Shoebox units pushing down the value of non-landed homes

The popularity of small apartments pushed down the total value of non-landed homes by 22 percent last year compared to 2010, according to the latest report by CBRE.

A total of 13,611 caveats were lodged for new non-landed homes in 2011 amounting to S$16.568 billion, significantly lower than the S$21.173 billion collected from 13,933 caveats a year before.

The sharp decline is attributed to the robust sales of shoebox units, which are not only located within the city fringes but also in suburban condo projects located on government land sites.

Based on caveats analysis, the median size of new units fell to 721 sq ft in Q1 2012 from 1,249 sq ft in Q3 2009. Moreover, the median quantum of new apartments dropped below the S$1 millionth-mark since Q1 2011 and median quantum of new apartments shrunk to S$797,000 per unit from S$1.06 million in Q3 2009.

“While it is true that there is resistance at this level, particularly for suburban condominiums, the declining median price does not imply a fall in home buyers’ affordability,” noted CBRE.

It added that government statistics indicate a rise in average monthly income for resident employed households from S$6,342 in 2010 to S$7,037 in 2011.

“It just means that the property measures are working because home buyers are lowering their risk by investing smaller sums. The industry has come to realise that the playing field has changed and is still changing,” said Li Hiaw Ho, Executive Director at CBRE Research.

He noted that by offering cheaper units below S$1 million, “developers have now been able to attract not only families but also single professionals, empty-nesters and retirees into the market”.

Most recently, National Development Minister Khaw Boon Wan said that units built by private developers are becoming smaller and cited the sudden increase and popularity of shoebox units.

He noted that the government “may have to step in” if the number of such units coming into the market gets too high. 

Sentosa Cove bungalow asks a whopping S$108m

A two-storey bungalow located at Ocean Drive in Sentosa Cove (pictured) has been put up for sale at a whopping price of S$108 million, which works out to around S$9,000 psf.

Multiple listings of the 103-year leasehold property were listed on PropertyGuru in the past month, with a total of three agents marketing the property – an indication that the seller hopes to close the deal soon.

Apart from the price being negotiable, the advertisements stated that the property is sited on a land area of almost 20,000 sq ft – the largest on Sentosa Cove. In addition to having six bedrooms, sea views and its own swimming pool, it is within close proximity to Harbourfront MRT station, the central business district (CBD) and VivoCity mall.

Commenting on the high asking price, Robert Jones, one of the agents’ marketing the property on behalf of the seller, said: “The site is huge, being located on two plots and has sea views.”

According to Jones, the bungalow which is owned by a Singaporean, has not seen much interest and has been marketed for about a month.

“The lack of interest isn’t surprising,” said Tejaswi Chunduri, Regional Analyst at PropertyGuru.

“Such a high asking price is unusual and despite the various facilities and perks like the sea view, pool and prestigious location, sale prices for other projects in the area have paled in comparison to what’s being asked,” she added.

The previous record for a sea-fronting bungalow on Sentosa Cove was for a home at Cove Drive back in February this year, which was sold for S$39 million. This works out to about S$2,448 psf for a land area of 15,929 sq ft. The 99-year leasehold property has five bedrooms, a spacious living area and an entertainment room.

The sale price for the Ocean Drive bungalow is expected to beat the S$39 million mark.

More measures will harm property market: OrangeTee

Data for Q1 2012 released last week by the Urban Redevelopment Authority (URA) showed that residential property prices in Singapore dropped for the first time since Q2 2009, recording a 0.1 percent slip. This is in contrast to the 0.2 percent rise seen in the previous quarter.

According to OrangeTee Research & Consultancy, the decline “is within market expectations, as the market starts to feel the effects of market cooling measures introduced in December 2011”.

However, landed property prices are still resilient, marking a marginal increase in the quarter.

“The resilience in landed property prices can be attributed to the scarcity of landed properties as well as the profile of landed property buyers; less susceptible to market conditions,” said the firm.

While overall rents for Q1 2012 rose by 0.3 percent, it is still lower than the 0.4 percent growth in Q4 2011. Occupancy rates also dwindled marginally to 94 percent from last quarter’s 94.1 percent.

“According to URA’s statistics, a total of 10,796 units from developments with sales licenses are expected to be completed for the whole of 2012. As this is 10 percent above historical level, we expect the weakening rental market to cause occupancy rate to soften in the coming quarters, especially in the high end market,” said OrangeTee.

The main concerns lie in policy and supply. “The threat of more government cooling measures which could again have a negative impact on sentiments and possibly overly restrictive policies which might create further negative image of Singapore as an investment destination,” it said.

The slew of new project completions from 2013, along with a tightening of the immigration policy, could also affect rental demand.

Moving forward, “improving economic indicators and a recovery in the stock market has boosted confidence of buyers which has resulted in a strong primary sales market”.

“Without external factors that could trigger a rapid destruction in wealth, we maintain our view that the market will likely avoid a sharp fall in prices in 2012,” noted OrangeTee.